Taking minutes during startup board meetings may seem like a mundane task, but in reality, it is a critical aspect of corporate governance. Not only do these records serve as a legal documentation of decisions made, but they also offer transparency and accountability, while providing valuable insights into the strategic course the company is charting.
This article outlines what to include in meeting minutes, best practices for minute-taking, and how to maintain good records for efficient management and due diligence. Whether you are an experienced notetaker or a novice, this article will equip you with the skills necessary to ensure nothing of significance slips through the cracks.
It’s often helpful to work with counsel to draft or review board meeting minutes. If you’re looking for counsel, feel free to reach out to us here.
Board meeting minutes are a necessary part of a company’s record-keeping. They are often drafted by counsel and serve several purposes, including being a reference for potential investors, acquirers during due diligence and even litigants. Good board meeting minute-taking is essential for startups for several reasons:
- Compliance and Legal Protection. Accurate minutes serve as a legal record of board decisions, resolutions and actions, which may be crucial for compliance, auditing or legal purposes. They provide evidence that the board is fulfilling its fiduciary responsibilities, helping to shield the company and its board members from potential legal disputes or liability.
- Investor Confidence and Due Diligence. Good minute-taking practices demonstrate to potential investors and acquirers that the company maintains professional standards of governance. This can boost confidence during due diligence and simplify the process by providing a clear record of the company’s strategic decisions and progress.
- Clarity and Accountability. Minutes provide a clear record of what was discussed, decided and the actions assigned during the meeting. This promotes accountability among board members and executives, ensuring everyone understands their tasks and responsibilities.
- Strategic Continuity and Consistency. Minutes serve as a valuable reference point for past discussions and decisions, ensuring strategic continuity. They help avoid repeated discussions and promote consistency in decision-making.
- Improved Communication. Minutes can be shared with stakeholders who were not present at the meeting, facilitating better communication and understanding of the company’s direction and strategy.
Therefore, good minute-taking practices at board meetings are critical for a startup’s governance and strategic management processes. It’s essential to prepare these records promptly and keep them securely, often in an electronic data room. This ensures easy access for management and counsel, and facilitates efficiency during due diligence.
Meeting Minute Format
The meeting minutes are based off of the agenda set forth in the board deck. So, draft meeting minutes are often created prior to the meeting to help with more efficient note-taking and finalizing. If you want to learn more about building a board deck and preparing for a board meeting, click here. [Link to: How do I run an effective board meeting?]
While there is no required format, board minutes typically track the agenda of the meeting and should generally include:
- The name of the company
- Date, time and place of the meeting
- Whether or not the meeting had a special or specific purpose
- Name and title of the persons who acted as chairperson and secretary of the meeting
- Whether the meeting was held pursuant to notice, or that notice had been waived by those entitled to receive it
- A listing of officers or directors present either in person or by proxy and their voting power
- Whether a quorum is present
- Whether minutes from a previous meeting were distributed and approved, or approved as corrected
- Description of any reports presented and identification of the presenters
- Any resolutions or other votes presented, discussed, approved, disapproved, etc.
- Who made the motions, who seconded the result of the vote
- Any other business presented
- Time and date of next meeting
- Time of adjournment
The minutes should be approved by the Board of Directors (BoD) and signed by the secretary.
What to Include, What to Leave Out
The core section of meeting minutes should provide a succinct statement of each board action, along with a brief explanation of its underlying rationale. If extensive deliberations precede a decision, a summary of key arguments should be included to demonstrate the board’s exercise of its fiduciary duties.
However, meeting minutes should not resemble a transcript, and participant names need not be recorded to promote open deliberation without concerns of legal implications. Sensitive information that may not be appropriate for third-party disclosure should be omitted.
In conclusion, effective board meeting minutes are an essential part of any startup’s governance and strategic management processes. By following good minute-taking practices, startups can promote accountability, due diligence and investor confidence, while also ensuring strategic continuity and communication with stakeholders. Remember to keep minutes concise but informative, and focus on recording key decisions and rationale. With proper preparation and record-keeping, startups can ensure they’re on the right track for success.